Labour looks at coal options

The Government is considering proposals to prevent the closure of much of Britain's coal industry in moves which will raise hopes that some form of state support will materialise to keep deep mines open.

The measures under review include some of the recommendations made by the Commons Trade and Industry Select Committee after the 1992 coal crisis, when the Conservative government stunned the industry with plans to shut 31 pits with the loss of 30,000 jobs.

Richard Caborn, minster for the regions, regeneration and planning, who chaired the DTI select committee five years ago, is analysing a range of measures to help the industry. His role reflects growing concern within Government at potential damage to its reputation if RJB Mining, which owns most deep mines, earmarks up to half of the remaining 17 pits for closure.

Government sources played down speculation yesterday that Mr Caborn was being brought in as a fixer to salvage Labour's energy policy after concern at the mounting criticism levelled at the DTI. Mr Caborn is to publish proposals to curb opencast mining, fulfilling one of Labour's manifesto commitments, but is understood to be extending his probe into the future of coal after the next wave of contracts with power generators expire in four years' time.

Mr Caborn was said to be "dusting off" the recommendations in the select committee report, which were designed to create a long-term market for coal. One proposal was to subsidise the state-owned British Coal to help it compete with cheaper imports. Another proposal was to encourage regional electricity companies to buy more coal-fired power and to cut their purchases of gas-fired energy.

The DTI has rejected a request for subsidies from RJB, insisting that it would not be appropriate to give direct aid to a private quoted company. However Mr Caborn's involvement will increase speculation that some other form of support could be under discussion. Sources emphasised that coal was no longer a problem confined to the DTI and was being co-ordinated at cabinet level.

This week the prospects for the industry worsened after RJB agreed a supply deal with National Power which would reduce the amount of coal the generator buys by more than half.